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Stochastic dominance representation of optimistic belief: Theory and applications

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  • Osaki, Yusuke
  • Quiggin, John

Abstract

This note gives a stochastic dominance representation of more optimistic belief in rank dependent expected utility. Applying this observation, we can demonstrate the effect of more optimistic belief on economic decisions and equilibria under risk making comparative static analysis.

Suggested Citation

  • Osaki, Yusuke & Quiggin, John, 2008. "Stochastic dominance representation of optimistic belief: Theory and applications," Economics Letters, Elsevier, vol. 101(3), pages 275-278, December.
  • Handle: RePEc:eee:ecolet:v:101:y:2008:i:3:p:275-278
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    References listed on IDEAS

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    1. Han Bleichrodt & Louis Eeckhoudt, 2005. "Saving under rank-dependent utility," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 25(2), pages 505-511, February.
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    12. Ryan, Matthew J., 2006. "Risk aversion in RDEU," Journal of Mathematical Economics, Elsevier, vol. 42(6), pages 675-697, September.
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